Club varieties – a growing success

Club varieties account for an increasing share of the apple market
but how does the concept work and what are the benefits? Urs Luder,
CEO of variety management company GKE, sets out the answers

Where did club varieties start?

The roots of club varieties can be traced back to the first patented
apple - the Honeycrisp which was developed in 1960 by the University
of Minnesota. The university obtained a patent on the cultivar which
meant any grower who bought a Honeycrisp tree in the USA paid about $1
in royalty fees for each one.

In the 1980’s and 1990’s new varieties were developed by various
breeders around the world with the aim of capitalizing on the concept
and marketing apples through clubs with growing rights. Apple brands
such as Pink Lady® (variety name: Cripps Pink), Kanzi® (variety name:
Nicoter) and Jazz™ (variety name: Scifresh) are some of today’s
biggest global brands out of these developments and many others are
more focused on certain continents or regions.

What are club varieties?

Club varieties are licensed for growing and marketing by a plant
breeder or another corporate entity which owns the legal rights to
that variety. Licensees are growers and marketers depending on the
licence system.

How does a farmer become member of a club?

Once a variety has been created any prospective grower approaches the
licence holder to get permission to plant it and applies to become a
club member. Application can be directly with the licensor (Variety
Manager) or via the grower’s producer organization. It depends how the
club is structured and the licensing system is organized. If approved
by the owner to the rights, the grower would then sign up to a licence agreement.

What are the likely management controls?

Approval and subsequent management controls on growing club varieties
vary widely, the simplest probably being a basic royalty fee for
trees. But it can go to fully-closed arrangements with licence
agreements containing strict rules on other production factors
including fruit quality, agronomy, marketing (branding) and tree numbers.

What are the typical extra costs of growing club varieties and
what premiums are possible?

Usually the grower has to pay one-off and/or recurring licence fees.
The most common arrangements are tree royalties, acreage royalties
(per hectare) or produce royalties (royalties per kg marketable
fruit). Each club has its own licence fee structure, using one or a
combination of the mentioned licence fees. The potential premiums vary
from one club variety to another. The idea behind the managed
varieties is to have a more stable yearly income for the grower,
meaning that the marketers aim to avoid the erratic up and down swings
of prices that selling commodities can have. Well managed varieties
accomplish this through precise marketing and technical support to
optimize prices and control supply which more than compensates the
extra cost incurred over the lifetime of the tree. Not many varieties
achieve this status but Pink Lady®, Kanzi® and Jazz™ are good examples
of how tightly-controlled club varieties can work for the growers.

What does the retailer get out of the agreement?

Premium lines are important for retailers and club varieties provide
that point of difference. Many retailers look for an exclusive supply
of new club varieties to go in to their premium lines but many are
across all retailers such as the three mentioned previously.

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